NAPLES, Fla., Aug. 27, 2012 (GLOBE NEWSWIRE) -- Paul Larsen, a former VSR Financial Services financial advisor, violated the law and FINRA regulatory rules in deceptively selling non-traded REITs and other alternative investments to a retired Florida couple living in an assisted living community, according to a claim filed last week by the law firms of Vernon Healy and Dovin Malkin and Ficken.
After meeting VSR financial advisor Paul Larsen at their Fort Myers, FL assisted living community, the retired couple entrusted Mr. Larsen with the bulk of their retirement nest egg asking him to invest in low-risk investments that produced income. Contrary to this, Mr. Larsen placed the retired couple in high-risk, illiquid non-traded REITs and other risky investments.
As result of this wrongdoing, the retired couple's savings made its way into multiple non-traded REITs, including KBS REIT I, and Inland Western REIT (now known as Retail Properties of America). Unfortunately, these two non-traded REITs have slashed their share price from the original $10 per share down to $5.16 and $6.95 respectively. Distributions have also been reduced or suspended by these REITs. For example, according to KBS's latest SEC quarterly report, on March 20, 2012, KBS REIT I suspended all monthly distribution payments indefinitely "in order to manage [its] reduced cash flows from operations and to redirect available funds to reduce [its] debt." Vernon Healy's Claim alleges that their clients were not adequately informed of these risks or the possible illiquidity of these non-traded REITs.
The claim alleges that VSR Financial failed to supervise the Naples broker, who recommended multiple, unsuitable investments, and misrepresented the details of the investments he sold the retired couple. The claim asserts that the actions of VSR's representative constitute fraud, a breach of fiduciary duty and a violation to the Florida Securities Act. The Claim seeks redress of more than $200,000 on behalf of the retired couple.
"Sadly, this type of behavior occurs regularly. A broker befriends potential clients, wins their trust, even goes visit them at their home, and then places them into unsuitable risky and highly illiquid investments that pay high commissions," said securities attorney Chris Vernon.
Several other non-traded REITs continue to cause devastating losses to investors. Just over one week ago, CNL Lifestyle Properties, Inc. announced a share price reduction of more than 25% (down from $10 per share to $7.31 per share), causing investors automatic dramatic losses. Likewise, an article published by Forbes last Friday highlights additional concerns on other non-traded REITs, including an investigation conducted by FINRA against David Lerner & Associates – the exclusive vendor for Apple REITs. "The high commissions associated with most non-traded REITs seem to be enticing unqualified and unethical financial advisors to put their own interests in front of the interests of their clients" Vernon added.